March construction data mixed

Housing starts climb 2.8%, but permit applications drop

Roofers work on a new house in Pepper Pike, Ohio, in March. Home construction in the United States rose moderately last month, the Commerce Department said Wednesday.
Roofers work on a new house in Pepper Pike, Ohio, in March. Home construction in the United States rose moderately last month, the Commerce Department said Wednesday.

WASHINGTON - U.S. home construction rose moderately in March as builders resumed work at the end of a frigid winter. But applications for building permits slid, clouding the outlook for future construction.

Builders started work on 946,000 homes at a seasonally adjusted annual rate in March, up 2.8 percent from 920,000 in February, the Commerce Department said Wednesday. Construction of single-family homes rose 6 percent, more than offsetting a 3.1 percent drop in the construction of apartments, condominiums and town houses.

As the weather moderated, construction rose 30.7 percent in the Northeast and jumped 65.5 percent in the Midwest. But it fell 9.1 percent in the South and 4.5 percent in the West.

Applications for permits, a gauge of future activity, fell2.4 percent to a seasonally adjusted annual rate of 990,000.

“The outcome is less dynamic than anticipated,” Annalisa Piazza, an economist at Newedge Strategy, said in a research report.

Economists had expected housing starts to hit 970,000 last month. Piazza noted that housing construction in March was 5.9 percent less than a year earlier.

“It echoes several of the other reports we’ve seen of late which do show a spring snapback, but one not nearly as strong as once hoped,” said Dan Greenhaus, chief strategist at BTIG.

Many analysts have been expecting an improving economy to lift the housing market, which has been recovering the past two years. But housing has struggled to maintain momentum. Rising prices and higher mortgage rates have deterred some home buyers. Others have had trouble qualifying for mortgages.

Builders complain of a shortage of workers and land to build on.

U.S. home builders’ confidence in the housing market rose modestly in April but remained at low levels for the third-straight month, according to the National Association of Home Builders/Wells Fargo builder sentiment index, released Tuesday.

The index, which measures confidence in the single-family home market, edged up to 47 in April from 46 in March. Readings below 50 mean builders view sales conditions as poor. The index had been above 50 from June through January.

Still, the March gain in single-family home construction is encouraging. Every single family home built creates three jobs and generates $90,000 in tax revenue, according to the home builders group.

Factory production climbed 0. 5 percent in March after a revised 1.4 percent surge in February that marked the biggest gain in almost four years, the Federal Reserve said Wednesday.

Assembly lines are accelerating as retailers restock inventory after American consumers, braced by gains in hiring, return to shopping malls and auto dealerships.

“There’s a lot of pent-up demand among consumers and businesses, and factories have to produce those goods,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “Housing is still in recovery mode. We have a long way to go before we get to expansion in this sector.”

The Fed’s report also showed total output, including factories, mines and utilities, climbed 0.7 percent last month after a revised 1.2 percent increase in February.

The report is consistent with data from the Institute for Supply Management that showed manufacturing accelerated in March, driven by production and orders. Gains in output included makers of business equipment such as computers and communications gear and suppliers of construction materials, furniture and appliances.

The output of motor vehicles and parts decreased 0.8 percent after a 6.9 percent surge a month earlier that was the biggest since July 2010, according to Wednesday’s report.

Information for this article was contributed by Paul Wiseman of The Associated Press and by Shobhana Chandra, Jeanna Smialek and Kristy Scheuble of Bloomberg News.

Business, Pages 23 on 04/17/2014

Upcoming Events